Mariani, FabioVandenberghe, VincentAyarza, AlaitzAlaitzAyarza2025-05-142025-05-142025-05-142017https://hdl.handle.net/2078.2/11177The scientific community agrees on the fact that in order to meet the targets set in the Paris Agreement 2015, a transition from the use of "dirty" to "clean" technologies is necessary. Acemoglu et al. (2012) present the first framework that analyzes how the direction of technical change reacts to different environmental policies. Their result is more optimistic than previous work by other authors, as their model predicts that temporary intervention is sufficient to prevent an environmental disaster. We claim that this result is partly driven by the assumption of perfect-mobility of labor across sectors. We show that for the case where workers cannot switch across sectors, a permanent intervention is indeed necessary to avoid threatening levels of climate change. Given that evidence suggests that workers cannot freely move across sectors but that they face switching costs, we develop a model of imperfect labor mobility that characterizes the conditions under which workers currently employed in the dirty sector are willing to switch to the clean one. Our model predicts that offering higher wages in the clean sector is necessary but not sufficient to direct workers. Regardless of the wages, when the technology level in the clean sector is too developed, the switching costs that workers face are too high and they choose to stay in the dirty sector. In this simple setting this result suggests that the social planner needs not only to subsidize scientists in order to direct technical change towards the clean sector, but he also needs to do so with workers. Moreover, given that for low levels of technological sophistication in the clean sector higher wages in this sector are enough to attract workers, intervention should be immediate to avoid additional costs of delay.Labor-MobilityTechnical ChangeEnvironmenttext::thesis::master thesisthesis:11575